• Fri. May 24th, 2024

Disney Questions Web3 Value, Terminates Metaverse Division, and Lays Off Team

Patrick Carter

ByPatrick Carter

Mar 28, 2023

Disney is questioning the viability of metaverse value by scraping off the division to exercise control over costs. Efforts by Disney chief executive Bob Iger to streamline business are evident in the decision to rightsize its workforce.

Disney Abandoning Metarverse Projects

Disbanding the metaverse division led to the axing of 50 experienced metaverse experts responsible for delivering next-generation storytelling and web3-based consumer experiences. Laying off the metaverse team constitutes a portion of the 7000 staff Disney is releasing as it eyes a streamlined business model.

As reported by the Wall Street Journal, the metaverse division’s termination arises from the giant entertainment firm’s plans to minimize the operating expense by $5.5 billion. The initiative would see Disney lay off 7000 employees in 60 days, acting on advisory services offered by McKinsey & Company.

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Pursuit of Opportunities in Metaverse Turned Futile

Metaverse division featured in the mid-2021 strategy by Disney to pursue emerging opportunities in Web3. It culminated in the selection of Polygon as the preferred blockchain choice.

The entertainment company would assemble resources in September 2021 by engaging an in-house counsel to offer special services for non-fungible tokens (NFTs) and decentralized finance (DeFi).

Nevertheless, Disney’s metaverse plans would remain uncertain later. Still, Disney engaged corporate attorneys to handle digital asset-oriented transactions, including NFTs, metaverse, DeFi, and blockchain.

A publication by Citi in October 2021 classified Disney, along with WWE and Electronic Arts, as among the entities to leap the huge potential of non-fungible tokens (NFTs).

Termination of Metaverse Project Causes Meltdown in the Segment

News of Disney ditching the metaverse project is causing shockwaves across the segment. Scrutiny of metaverse majors indicates the segment slid 5.8% to $7.49 Billion. Internet Computer (ICP) is 3.4% down, while The Sandbox is exchanging hands 2.2% below yesterday’s price. The Decentraland’s MANA is no exemption as it declined by 3%, a trend replicated by Axie Infinity (AXS) by 2.5% and Render (RNDR) by 5%.

Terminating the metaverse division is a big blow to developing exciting channels to engage the Disney audience. The March 28 post by the Wall Street Journal (WSJ) ends the tenure of 50 employees. Given his broader leadership role in the consumer production department, Disney is set to retain Michael White.

The devotion of the metaverse division has shown since its creation in February 2022. The team has been devoted to creating new engagement mechanisms to improve the in-store shopping experience with the audience.

Unfulfilled Projects Characterize Disney Investment in Metaverse

A notable feature of the snail-paced metaverse projects is the successful development and patenting of a virtual world simulator. It involved a headset-free augmented reality that, by December 28, 2021, was in use within the Disney theme parks.

Efforts by Disney to integrate metaverse within sports betting still need to materialize. The pursuit of the integration idea has yet to progress. Such contradicted the position portrayed by Disney’s previous premier Bob Chapek and current chief executive, Iger. Both executives expressed optimism that metaverse technology would present a bullish investment opportunity.

Unfavorable Economic Conditions Convince Disney to Abandon Metaverse 

Disney’s decision to terminate the metaverse team shows the entertainment giant is overlooking the pursuit of opportunities in the segment. The position contradicts previous forecasts by Chapek, who considered the metaverse the breakthrough frontier in storytelling projects. The position received backing from Iger, an experienced strategic adviser in Genies itself utilizing the digital avatar platform established upon the Flow blockchain of Dapper Labs.

Scraping the metaverse division is inevitable for Disney as it eyes minimal operating expenses. Besides, the crypto industry is still battling unfavorable economic conditions. Also, conventional players are confronting increased rivalry from startups.

Consequently, abiding by the McKinsey & Company report challenging Disney to identify cost-cutting opportunities justifies the laying offs and termination of the metaverse division.

Editorial credit: AFM Visuals / Shutterstock.com

Patrick Carter

Patrick Carter

Patrick Carter is a seasoned news writer known for his meticulous research and engaging storytelling. With a dedication to providing accurate and informative news coverage, his articles offer readers a comprehensive understanding of current events with a fresh and thought-provoking perspective.

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